China is experiencing a massive restructuring and strengthening of policy integration among government agencies. A major reform that has been little noticed outside the climate policy community is the movement of the Department of Climate Change from the National Development Reform Commission (NDRC), the influential economic planning agency, to the new Ministry of Ecology and Environment (MEE).

The organizational reform plan released on August 13 lays out the MEE’s mandate, organizational structure and staffing details. The mandate on climate policy has three parts – to develop macro-level climate strategy, plans and policy; to jointly lead international climate change negotiations together with other relevant ministries and to implement and coordinate United Nations Framework Convention on Climate Change (UNFCCC)-related affairs.

A display at the International Exhibition on Energy-Saving New Energy Vehicles and Electric Vehicles in Guangzhou, China on July 29, 2018. /VCG Photo.

What are the implications of these changes in China’s future climate policy? Shall we expect more ambitious goals or the contrary? What specific policies and actions can we expect from the new MEE?

Strengthening the Legal Basis of China’s Climate Policy

In the context of China’s broader, multi-year effort to improve environmental management, the migration of climate policy authority into an increasingly comprehensive and robust environmental regulatory system, led by MEE, will likely strengthen China’s greenhouse gas (GHG) reduction efforts.

And specifically, there are certain things that we might expect – and hope for – if China is to create a truly effective climate policy strategic system (misgivings about the often-frustrating pace of these policy developments notwithstanding).

The new climate change policy mandate signals that China considers climate change to be a part of its long-term domestic environmental strategy and an important component of the ecological civilization vision that President Xi has been articulating.

At a national conference on environmental protection attended by six members of the Standing Committee of the Political Bureau of the CPC Central Committee, President Xi emphasized the importance of establishing a national climate change strategy. High-level pronouncements like this one are often an indication of formal policy coming down the line, and we are now seeing some early steps in this direction under the MEE.

Chinese people in Copenhagen portray the slogan "Save Our Planet: China's Contribution" during the Climate Change Conference in Copenhagen in 2009./ VCG Photo.

Until recently, Chinese policymakers have tended to see climate change through the prism of development and international diplomacy, as opposed to thinking about it as an environmental concern. In international climate negotiations, China has emphasized that its carbon reduction responsibilities must be balanced against its developmental rights, a position reflected in the fact that the climate change department was part of the NDRC.

It was after the 2009 COP15 in Copenhagen that climate change and carbon mitigation became part of China’s political agenda.

Since then one of the shortcomings of the nation's climate policy has been that it lacks a firm legal basis. Correcting this would fall in line with MEE’s mandate to develop macro-level climate strategy, plans, and policy.

The goals set in China’s 12th and 13th Five-Year Plans(2011-2020) – reducing carbon emissions per unit of GDP by 16 percent and 18 percent, respectively – are legally binding and undoubtedly powerful in the context of China’s political framework.

However, a law on climate change or a legal definition of CO2as a pollutant would be a far stronger spur for policy action. Unfortunately, the proposal for a national climate change law suggested as early as 2009, has not yet made it onto the State Council’s legislative agenda.

The transfer of the climate portfolio from NDRC to MEE could change that. This handover could make carbon mitigation, which has often been a token of international negotiations, into a domestic environmental priority. There are three ways this could happen.

The first approach would be to give climate policy a firmer institutional foundation – to classify GHGs as pollutants that are legally subject to the environmental law. Climate policy could conceivably be integrated into China’s Environmental Protection Law, which will likely see revisions when MEE announces its work plan.

The second approach would be to redefine the term environment in the law to encompass climate, making dangerous climate change a direct target of China’s increasingly assertive, legally mandated environmental protection efforts.

The third approach would be for China’s legislature to finally create a standalone Climate Change Law.

At this early stage, the MEE is being structured around traditional environmental concerns – air pollution, water quality, waste management, nuclear safety, etc. Each of these areas is governed by a separate law that mandates a focused government response.

Given the idiosyncrasies of carbon emissions (e.g. their global nature, their tight coupling with the energetics of modern economic systems, the alarming prognosis that we’ve likely already locked into a higher than 2-degree path), it would be wise to have a law that drives China’s climate policy forward in a focused manner.

China’s leadership in global environmental governance

Undoubtedly, China has made great strides in climate policy. The highlights include a commitment to peak energy-related CO2 emissions by 2030, setting national carbon intensity targets in the 12th and 13th Five-Year Plans, developing national and subnational GHGs Emissions Control Plans, and launching phase one of the national carbon market. In addition, low carbon development pilots have been implemented in six provinces, 69 cities, two counties and 67 industrial parks.

A man walks inside an office building of Yingli Solar in Baoding, Hebei Province, May 5, 2014. /VCG Photo

These are high-level actions that work through the national and local economies, which is to be expected given the National Development Reform Commission (NDRC)’s broad macroeconomic purview.

In contrast, the MEE’s environmental protection mandate will bring it closer to the specific sources of emissions. The national carbon market, if implemented well, will reduce emissions at the source.

If climate policy is folded into China’s environmental protection law, it would likely be implemented according to the existing environmental management system. The main pillars of this system are environmental quality and pollutants emissions standards, monitoring, reporting and verification (MRV), and environmental impact assessment. Within this environmental management system, we might see China setting GHG emission standards for power plants, vehicles and energy-intensive industries, like in Europe and California, where standards systems play an important role in bringing down emissions.

This would increase the transparency of GHG emissions data more than ever before because the creation of a source-based emissions inventory would likely be the first step in bringing carbon under an MRV regime. The Environmental Protection Law and other laws on air, water and solid waste require pollutants emission data to be disclosed to the public, but GHG emissions currently have no such requirement. Bringing transparency to carbon emissions would be a huge step forward.

Few doubt that China will play an increasingly important role in global climate governance. America’s withdrawal from the Paris Agreement comes at a time when China has been ramping up its climate leadership. President Xi Jinping has highlighted climate change as a central pillar of China’s contribution to global environmental protection efforts on several occasions. He has described China’s role as including promoting and leading.

How will the MEE contribute to this leadership drive, given its mandate to help lead international climate negotiations? There are two things we can expect to happen in the near term.

European Union representatives celebrate the adoption of the Kigali Amendment on October 15, 2016, in Kigali, Rwanda. /VCG Photo

Green cooling is an area of work that sits right at the intersection between the Kigali Amendment and the Paris Agreement, and where China has a chance to show leadership. The Kigali Amendment to the Montreal Protocol, passed in September 2016, calls on manufacturers of cooling technologies to re-tool their production lines with more climate-friendly refrigerant options, and China is by far the world's largest air conditioner manufacturer, consumer and exporter. Improving the energy efficiency of air conditioners and refrigerators will contribute significantly to the Paris Agreement's goals, not to mention helping to bring down electricity-related air pollution.

Bringing green principles to China’s Belt and Road Initiative will be another way for China to show its leadership. It will take a big effort to strike a balance between economic interests and environmental responsibilities. Innovative strategies are needed here.

Beijing Summer Place natural scenery, August 18, 2018/ VCG Photo

What will be China’s flagship climate policy program？

The Ministry of Ecology and Environment (MEE) has been structured around reducing damage to the natural environment from air and water pollution, solid waste, and nuclear materials. Policy in each area follows a similar regulatory framework, and each has its own priority program.

For example, regional air quality coordination has played a central role in addressing air pollution and the “river chief” policy is now at the core of water protection efforts.

Now that the climate portfolio has moved from the National Development Reform Commission (NDRC) to the MEE, of all climate policy programs initiated by the NDRC, e.g., carbon markets and low carbon city pilots, which one will become the flagship?

Because it has been held by President Xi Jinping and because most experts believe it to be the most effective policy tool to mitigate GHG emissions, there is a bigger chance that China’s carbon market program will emerge as the flagship climate program.

Of course, as with any carbon market, its effectiveness will be determined by its design features. For the carbon market to work, it will need to be integrated into MEE’s environmental regulatory system. This will strengthen its legal foundation and improve the quality of MRV.

But this will have to be done carefully. Other ideas on the table, such as linking emissions allowances with environmental permits, or linking carbon trading with water or air pollution emissions trading, might slow down policy progress. That CO2 is a global pollutant while water and air pollution are domestic or regional problems will make this integration a challenge.

Cities could be where climate change and pollution control come together

All around the world, grassroots and sub-national actors and groups have become the heart of the climate movement. In China, municipal governments are leading the charge in climate action.

According to Policy Mapping, an online tool that tracks China’s climate policies maintained by innovative Green Development Program, more than 36 cities have committed to peaking their CO2 emission earlier than the national goal of 2030.

Wuhan, a city of 10 million in central China, has committed to peaking its CO2 emissions by 2022 and released the country's first ever city action plan laying out steps to achieve this goal.

Mandatory provincial and municipal implementation plans in low carbon pilots are the core policy to delegate environmental quality and carbon mitigation goals to China’s local governments.

Solar panels in Qinghai Province, China, March 30, 2018. /VCG Photo

These low carbon pilots have been carrying out local carbon mitigation experiments, generating a wealth of new information about which works and which doesn’t.

Non-pilot regions, however, have not had to develop carbon mitigation plans (carbon intensity reduction goals are included in their macro social and development plans, but detailed carbon mitigation plans per se are not required).

Because China’s low carbon pilots plans and actions are a good fit within MEE’s regulatory system, they may now serve to inform national policies that affect every city and province.

The Air Pollution Prevention and Control Law requires over 100 key cities across the country to develop compliance plans. There’s a good chance that the MEE will instruct cities to develop integrated multi-pollutant abatement plans that include GHGs emissions.

Incorporating carbon mitigation performance indicators into China’s Quantitative Examination System on Comprehensive Renovation of the Urban Environment would be a step forward towards this direction.

Merging Climate, Development and Finance Policy

The concern that removing climate policy from the NDRC’s mandate might weaken activity in this area is valid since the NDRC remains a powerful overall policy planning body within the Chinese government and carbon mitigation requires that we rethink economic fundamentals.

Pollution control traditionally focuses on end-of-pipe abatement measures whereas climate change mitigation is only truly practical when it addresses the front-end utilization of energy resources, including increasing energy efficiency throughout the economy and decarbonizing the power supply.

March 22, 2017: A class to disseminate water resource protection in Hebei Province, China. /VCG Photo

But the MEE seems ready to take this on. Minister Li Ganjie has emphasized “optimizing four structures” in explaining the newly released Three-Year Blue Sky Defense Plan. They include China's economic, energy, transportation and land-use structures.

Allowing the MEE to play a central role in decarbonizing and greening China’s economic growth will be critical if China wants to have a truly ambitious climate policy.

This makes environmental economic policies, including green finance, green insurance, green pricing, and of course carbon pricing, more important than ever.

Putting a price on climate change risk and incorporating this into investment decisions and infrastructure development will prove to be a key approach to merge climate and economic policies.

We can expect China to continue making progress in local environmental protection and global climate change mitigation. Challenges certainly remain, but the creation of the MEE reflects a genuine dedication at the highest levels of China’s leadership to build an “ecological civilization” that offers a clean environment at home and much-needed climate leadership in the world at large.

(This article is published on CGTN on August 20th, 21st and 22nd as a three-part series. For the original report, please see 原文链接, which is the first part, and you can find the other two parts in RELATED STORIES.)